Dubai is experiencing a shortage of villas and townhouses, driven by the influx of high-net-worth individuals post-pandemic and the increasing number of expatriates seeking long-term residency. Industry experts note that foreign residents planning to settle in the UAE long-term prefer larger villas, townhouses, and family-oriented amenities. Meanwhile, property developers are focusing more on apartments due to the high costs associated with villa community developments and the higher profit margins offered by high-rise apartment towers.
As reported by Khaleej Times, villa prices in Dubai's top 10 communities have more than doubled over the past four years, according to ValuStrat, a global real estate consultancy. Communities such as Arabian Ranches, Dubai Hills Estate, and Palm Jumeirah have seen capital values of villas surge by over 100% since 2020-21.
Data from Allsopp & Allsopp's third-quarter 2024 report indicates that villa and townhouse sales accounted for 20% of transaction volume and 42% of total market sales value, with demand persistently outstripping supply. This imbalance suggests potential price increases in the coming months. Popular villa areas in the last quarter included Jumeirah Golf Estate, The Springs, and Arabian Ranches.
Dubai has witnessed a significant influx of millionaires over the past three and a half years, attracting high-net-worth individuals from around the world who have purchased villas, townhouses, and luxury apartments for living or investment purposes. Issa Abdul Rahman, CEO of Kasco Developments, attributes the shortage to the influx of expat families and the growing number of temporary expatriates looking to settle in Dubai.
Yogesh Bulchandani, founder and CEO of Sunrise Capital, highlights that areas like Villanova and Dubai Hills are in high demand due to their luxurious amenities and family-friendly environments. He cites high demand from affluent buyers, limited land availability, and a post-pandemic preference for spacious living as contributing factors to the shortage.
Sunrise Capital estimates that Dubai is facing a shortage of approximately 10,000 villas. Both Bulchandani and Abdul Rahman agree on this figure, with the latter noting that villas priced between Dh3 million and Dh5 million are particularly in demand.
While villas generally offer lower returns compared to apartments, with average yields of around 6% versus 8% for apartments, they tend to appreciate more over time. Developers often prioritize high-rise apartment projects due to higher profit margins and quicker returns on investment, despite the complexities involved in villa development.
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